Bitcoin Surpasses $64,000, Why Did It Rise Today?

▲ Bitcoin (BTC) ©CoinReaders

Expectations of interest rate cuts, brought about by the slowdown in U.S. macroeconomic indicators, strongly pushed up the virtual asset market, causing Bitcoin (BTC) to instantly surpass the $64,000 mark. This rally is interpreted as a result of not just positive news for the asset itself, but a complex interplay of a weakening U.S. dollar and falling Treasury yields, which sharply increased Bitcoin's investment attractiveness.

According to cryptocurrency market tracking site CoinMarketCap on July 7 (local time), Bitcoin was trading at $64,323.41, up 2.60% from 24 hours ago, outperforming the overall market's average increase of 2.06%. The catalyst for this rally was the U.S. June Nonfarm Payrolls report, released on July 5. New job growth fell significantly below market expectations, increasing by only 57,000, which greatly reduced concerns about further interest rate hikes by the Federal Reserve (Fed). Consequently, U.S. Treasury yields and the dollar index declined, and as the opportunity cost of holding Bitcoin, which does not accrue interest, decreased, a large influx of buying power occurred. Experts believe that this rebound was driven more by changes in the macro (macroeconomic) environment than by internal issues within virtual assets, and they are watching whether the fund flow into U.S. Bitcoin spot ETFs, which turned to net inflows on July 2 for the first time in ten days, will support future upward momentum.

A massive short squeeze (buying pressure generated to liquidate or cover short positions) in the derivatives market also accelerated the rise. As the BTC price surpassed the $62,000 mark, leveraged positions betting on a decline were forced liquidated in a cascade, leading to over $170 million in liquidations. This was a 692% surge compared to the previous day, with short position liquidations alone accounting for $94 million. This created a typical short squeeze phenomenon where investors who had taken short positions were forced to buy Bitcoin to prevent losses, causing prices to skyrocket. Currently, the perpetual futures funding rate remains at a positive level of 0.0059%, but continuous observation is needed to see if buying leverage is becoming excessively overheated.

The short-term market outlook is cautiously optimistic. Technically, Bitcoin is currently approaching Fibonacci resistance levels located between $65,000 and $67,000. Fortunately, the 7-day Relative Strength Index (RSI) recorded 65.86, indicating that there is still room before reaching the overbought zone, suggesting further upward potential. The key question is whether Bitcoin spot ETFs, which saw an unprecedented outflow of $4.5 billion in June, will return to a solid inflow trend. If BTC stably holds the key support level of $62,600, there is a high probability that it will break $65,000 on a weekly closing basis and test the $67,000 mark. Conversely, if it fails to hold $62,600 support, the gains from this short squeeze could be given back, and the risk of retreating to the $60,000 support level cannot be ruled out.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*